The Bank Branch as a Grievances Cell

With the new banking licenses issued to Payment Banks by India’s banking regulator RBI, the country will witness new trends in digitized banking. The models can pave the way for a different customer experience altogether without dependence on brick and mortar infrastructure.

Within banking, the retail business digitized – adopted software and automation – faster than corporate and investment banking. The past decade saw branch retail banking transactions shrink drastically due to the emergence of electronic channels, such as ATM, internet, mobile, and call center, especially in the urban areas. All the simpler retail banking transactions, such as funds transfer, payment, cash withdrawal, checkbook request, or fixed deposit placement can be done through any of several channels. With increasing customer awareness and the availability of a variety of self-service channels, dependence on bank branches and staff has reduced. Banks have partially digitized the origination of retail loans but the extensive paper documentation needed for loan preprocessing and workflow, still requires some manual intervention, thereby preventing complete automation.

In the rural and semi-urban pockets of the country, the population is slowly becoming tech- savvy and digitization is spreading fast. The Government has also provided infrastructure support in the telecom industry, including leased lines, dial up connections, broadband, 2G, 3G, 4G etc., enabling banking customers to adopt digitization faster.

Retail banking has always provided new direction for corporate banking to follow; larger corporations are digitizing by using ERP software and connecting with banking software. Software solution providers have introduced SME solutions for connecting and integrating multiple customer and banking touch points. However, the extent of digitization in retail exceeds that in corporate banking by far.

Payment Banks can accelerate much needed digitization in rural areas to provide an entirely new dimension by:

a)      Digitizing customer onboarding and account opening

b)      Integrating customers, merchants, retailers and distributors in the supply chain ecosystem

c)      Offering online payments and funds transfer

d)      Digitizing other simple banking transactions, such as deposit and withdrawal

Payment Banks will be able to strengthen financial inclusion in the country by leveraging the reach of agent banking and the infrastructure of telecom and mobile operators. Though the area of operation of Payment Banks is restricted, any success they achieve would give the regulator greater confidence in allowing them to convert to Universal Banks in the future

To conclude, new models, such as Payment Banks, could gradually limit the activities of brick and mortar branches to addressing customer grievances because most transactions would be digitized and automated, and designed to originate and culminate in other channels. Integration and workflow automation will provide the customer with a very different banking experience. As a result, the customer will approach the branch only in the case of exceptional or failed transactions, and for raising complaints, which were not resolved through the digital framework.

The concept of modern day banking is changing with advancement in technology and security both, urging regulators to rewrite banking rules and codes that govern digital banking transactions.